Managing prices I Tenders
product can be modified by improving its features, without altering the
benefits to be gained, in order to attract new users or to increase its
If the product’s lifetime of
the product is on the downturn, then MSEs can look for new target markets
and introduce the product appropriately.
continuously is the best strategy to follow, however, only if the micro and
small enterprises can afford it. Moreover, with the different constraints
the companies have it may be difficult to set such strategy.
obvious that quality plays an important role to play
on getting repeat
quality is too expensive, then maintaining the current level is an important
strategy. In the event, that the enterprise's products are for sale to
customers that are quality oriented then the characteristic has to be
Some MSEs can develop a
strategy of manufacturing broader product lines. This strategy allows to
profit from economies of scale, which in turn will benefit customers in
getting inexpensive prices due to reduced overhead costs and so forces. In
addition, manufacturing a wide or full range of products in different
designs allows customers to do all their shopping in one location. This
could be applicable for products, such as raw food products, handicraft
products, or kitchenware.
When planning to develop a new
product the decision of which product and design to manufacture needs to be
based on research and not just on a temporary demand for a certain product
by a handful of people.
When the demand for existing
products is on the downturn the possibility of changing the design, size,
features, or colour. becomes necessary in order to maintain sales. Moreover,
such strategies require expertise in idea development and technical skills.
brand names can create more acceptability and a brand name can command
higher prices. This strategy may work for small enterprises, but not for
micro enterprises since it requires some expense and market campaigning.
Nevertheless, branding can be applied to products, such as glue, milk and so
A narrow product line with more
depth to quality is a liable alternative. This can be more appropriate in
furniture, photography, hairdressing, weaving, and garment
businesses. Creating linkages between manufacturers of raw material and
those who process products is a worthwhile approach. For instance weavers
can be connected with spinners.
linkages between manufacturers and suppliers is a good way for MSEs to
attain a continuous supply. For instance, manufacturers of chairs, tables,
low bed chairs (duka) etc. can be linked with plywood suppliers. This
applies also to those who manufacture cooking pans and caps who can be in
touch with the metal sheet suppliers etc. Cutting product lines and focusing
on fast selling products by marketing them effectively can be a good
approach to reduce inventory on a much more rapid basis.
research as a whole is integrated with the total business planning because
it deals with the identification of present and future market situation in
general. Therefore, trading has the task of going into detail of research
work. Nevertheless, an export enterprise has to first acquire knowledge of
the respective market potential. It is very difficult to plan world market
entry without conducting market research priory. Research also provides the
advantage of eliminating the dangers of intuition:
the current competitors in the market?
products are sold and at which prices?
their packages appeal and how are they advertised?
following issues can be addressed by research:
quality and standard of the product;
penetrate markets and increase market shares;
pattern of actual and potential consumers, competition;
effectiveness of promotion programs;
and behaviour of consumers;
identifying target markets;
policies of importing countries.
of planning to expand foreign market can be accomplished through effective
market research. Before planning to expand foreign market, a study of the
issues listed below will help:
for the product in the market;
of the market does the company currently hold?
shares can be increased within a given period of time?
the buyers of the product?
they prefer the company’s product vis-à-vis other competitive products;
the company's competitors?
threats lie ahead for the company?
By means of
an internal survey the following issues can be investigated.
production is expected to increase or decrease;
and disadvantages of selling one’s own products at lower prices compared
to those of competitors;
strength versus competitors';
of slow sales;
export sales trend both in quantity and value;
case of high stock of products existing, would price averaging help to
sell out the balance, if so at what cost?
regulations, which may affect trade.
By means of
an external survey the subsequent issues can be examined:
what purpose do consumers use the product?
their buying decision influenced?
promotional activities help sell the products;
estimate of potential buyers;
economic and political situation;
type and attitude;
speculation of production capacity and emergence of giant producers:
competitor’s prices and the reasons for price fluctuations;
movement of price increase is in favour or against the firm;
from competition and their effect on the market;
product is best sold through agents, representatives or others;
plausible opening a foreign branch is and the cost.
following data sources are suggested for exporters
Connection between Quality
and Market [top]
has to look into the strategic quality improvement because presently
consumers are highly concerned and aware about their needs. An exporting
firm can gain better market shares, if it follows consumer requirements and
measurements. Support and dedication from the management in quality programs
not an isolated field. It is a recognized guiding principle related also to
other marketing mixes. It encompasses different elements of theories. All
depending on the product type some define quality as:
effectiveness, elegance, fitness, reliability, durability, safety, taste,
conforming to standards, uniformity.
according to the definition provided by the Oxford business dictionary,
Ethiopian enterprises define quality as:
effective product strategy a firm is enabled to work fewer hours and make
money much easier. Enterprises in developing countries require decisive
product strategies that can lead their business to success. Classifying
products in terms of different aspects of the market, such as stated below,
provides a good basis for setting product strategies.
product strategy is that is to be formulated,
it has to be in line with the buyer’s requirements
as well as the changing needs of society.
alternatives, conducting market research is a valuable tool. Research can
look into major issues such as:
of the product;
types and requirements;
availability of substitutes.
product strategies can help enterprises
to reduce any disappearing Birr and minimize
the time that will be lost.
should be keen enough to keep customers satisfied through their product
strategy because the most important assets for a business organization are
the buyers themselves. However, the strategy should focus on keeping
customers happy with the products and with the way they are sold to them.
strategy that can build clientele and keep loyal
customers happy can be termed the best.
enterprise realizes that its strategies are effective, it should reinforce
them. In contrast, if it is required to change or modify the strategy to a
certain extent after a given time, then adjustments in product approaches
should be made without hesitating.
The pay off
to revised product tactics
based on market research is tremendous.
there are many successful product strategies, the ones that fulfil buyers'
requirements have to be taken into consideration. Some product strategies
fail for various reasons. The main causes for failure are:
formulated product program is poorly implemented;
important steps are forgotten or neglected during planning; for instance
if the product approach forgets to take into consideration consumers'
strategizing by giving more concern to the approaches of another companies
compared to own intents and goals.
Standardizing product has the advantage
of minimizing production and marketing costs,
which in turn provides a better price option to the buyer.
with the same standard can be introduced to different sectors of the
domestic market. The strategy can give advantages of minimizing production
and marketing costs. Despite that, the approach may not be applied to all
product lines. This approach relates to products to be sold to different
markets that have the same product needs. In most cases, the product is of
the same design, taste, size and specifications, except in few cases where
it is slightly produced to account for local differences.
Standardization systems can have drawbacks in that the product's
specification or design may not be compatible to all different areas. In
such cases, to enhance the product’s usage in many different locations, the
application of an effective promotional program becomes mandatory.
enterprise can develop credibility
and create confidence on customers through branding.
appropriate brand name is decisive for consumer bondage or the
identification of products. The trade name of the product can be used to
create a perceptible notion of the product. In addition, it creates a visual
impression of the product. Product branding facilitates one firm to be
chosen over another by just creating a branding image. The name by itself
can act as the firm's spokesman and can keep 'brand loyal customers'
setting branding-tactics requires detailed study with respect to the
brand name to set?
brand strategy is more effective?
brand type is less costly in terms of promotion, packaging and selling?
the advantages and disadvantages of one brand over the other?
approach has the advantage of charging premium prices and helping products
to sell more effectively. In addition, it helps companies segment their
markets easily for further consideration.
strategy provides the privilege of buying from one
enterprise, and thereby saving time and other costs.
companies could have lengthy ranges of products, which are grouped based on
raw material type, manufacturing process or product benefit. Manufacturing a
full range of products in various designs and types provides good advantages
to buyers, in the sense that they can make their selection from among many
product lines, and besides, they can save time in doing so.
approach of manufacturing a broader product line
allows benefiting of economies of scale and creating high traffic sales.
strategy focuses on keeping a large selection of products to facilitate a
vast assortment to buyers and consequently, to sell big quantities of
products and therefore bring success to the business.
development strategy has to consider
the potential buyer’s needs. There could be
instances where the temporary demand of
a certain product is considered.
development approaches can be successful when and if based on market
research. Some consumers prefer to purchase products just because
they are newly developed. For instance, some young shoppers prefer to try
out new product rather than sticking to existing ones. They believe that new
products are more powerful compared to existing similar products. If the
target market is a "yes" type to newly developed products, then the strategy
of producing new products will work. These propose can also be applied in
the event that the lifetime of the products decline.
product to be developed may not be the best and most sophisticated, but has
to be one that appears on the market freshly. New product development has to
refer to the original marketing plan and also it needs to examine the
implication of future competition;
availability of resources;
rates of return.
strategy provides an enhanced and more personalized buying option to
customers whose product preferences are different to standard products. This
approach has to look into aspects to which the buyer attaches more
customized products can provide the benefit of offering personalized
products, which may not be available in other competing companies. This
system provides the option of producing goods that fit a particular buyer.
Certain segments of market that do not appreciate buying standard products
have the alternative of going to such companies to buy according to their
promotional program for selling customized products can emphasize the
advantages and benefits the buyer can receive from the system. The selling
assertion should focus on things, such as ‘made to fit you', 'fits your
purpose', 'exact fit’.
are quality-oriented prefer to buy
from companies who are known in the market
as quality leaders or who have 'quality' as their motto.
specialization approach provides the benefit of being known in market as a
special enterprise, which consequently enables the firm to charge higher
prices. Quality-oriented enterprises need to refine and add continuous value
to their products, in order to keep buyers at bay.
Quality upgrading is the best approach and it distinguishes a company apart
from competitors. The tactic has to create a good fit between the product
and buyers needs.
demand for an existing product declines,
the possibility of changing the design, the size,
the features or its colour is necessary.
Moreover, the modification of tactics requires
expertise in idea development and technical skills.
new buyers and to increase product usage an existing product can be
modified. This system needs to be considered in conjunction with both the
features and benefits of the respective product. Another alternative is to
modify the benefits only. However, modifying only the features may not be in
the interest of the buyer because in most cases buyer's interests are the
benefits he gets from the product itself. The buyer may be ready to pay for
an increased price, provided the modification is in line with his needs.
Modification assumes prior market survey and it should answer inquiries such
product be modified technically?
the product be valued by buyers?
be the costs of modification be?
product have a competitive edge?
prices increase or decrease after modification?
increased prices be accepted by existing and new buyers?
Checklist for Product
some field research aspects for markets.
are the main sources for research?
are the competitors?
products are sold and at which prices?
there similar products?
Quality and Training
the setting of quality programs.
your product’s quality based on customer requirements?
Consider ongoing quality improvements.
staff been trained for quality awareness?
the quality of the competitor’s products?
competition before setting product strategies.
Analyse product planning from different market aspects.
you plan to set different product approaches?
your production program consider cost minimization?
your competitor’s prices.
level: Did you consider the issues that can affect prices?
various pricing approaches into consideration.
Managing prices I